Bad news for Interest Rate Hawks - RBA Cash rates unchanged
- Thread starter buzzlightyear
- Start date
Black Swan events
I'm surprised that anyone would think that the current economic situation in Australia or the world is OK. It is clearly not. On the larger scale, the problems in USA and EU are structual and will take a generation to adjust,(USA in particular). Australia is completely at the "mercy" of this situation. The RBA has a nice buffer to use when the s##h hits the fan, and they will use it. With China still growing,(apparently) for the next few years Australia will have some breathing space for maybe 18 months. So rates may hover, or go up in the short term, but probably hover. And then drop rapidly in 12-18 months.
What does this mean for us,... purchases for capital gain are not the driving force they once were...cashflow is now "king"..again.
If you need to sell, sell now. If you want to buy, wait for 12 months and build your cash position. Anyone with cash will be in a strong position to purchase good property with good returns. Many will hurt. For those who purchased years ago and are cashflow positive sit tight and enjoy the opportunities.
However, remember the "black swan", and anything can happen.
I'm surprised that anyone would think that the current economic situation in Australia or the world is OK. It is clearly not. On the larger scale, the problems in USA and EU are structual and will take a generation to adjust,(USA in particular). Australia is completely at the "mercy" of this situation. The RBA has a nice buffer to use when the s##h hits the fan, and they will use it. With China still growing,(apparently) for the next few years Australia will have some breathing space for maybe 18 months. So rates may hover, or go up in the short term, but probably hover. And then drop rapidly in 12-18 months.
What does this mean for us,... purchases for capital gain are not the driving force they once were...cashflow is now "king"..again.
If you need to sell, sell now. If you want to buy, wait for 12 months and build your cash position. Anyone with cash will be in a strong position to purchase good property with good returns. Many will hurt. For those who purchased years ago and are cashflow positive sit tight and enjoy the opportunities.
However, remember the "black swan", and anything can happen.
China is exporting inflation as their middle class grows, but the RBA have set up trackers to monitor all imported inflation like oil and labour now, so it's gauged.
Inflation plus no growth or negative growth ( ugh! I hate that term, oxymoron) is STAGFLATION. Have a look at other periods in Aussie history where the same conditions were present and see what they did.
So youre saying that the economy is **** but inflation is coming, or here?
By that reasoning, the UK should have IRs at about 8% and the USA with it's latest round of stimulus and on-the-ground inflation running at 9% YTD should have around 12% IRs.....but they don't.
Considering we are following their lead in this whole QE mess and the RBA have recently been meeting with other heads of cartel to discuss adjusting inflation targets upwards, your case just seems like you are trying to unpaint yourself out of the corner.
I'm sorry, but the more I try to look at the issue subjectively, the more I come up with the fact that it will not be a 1987 - 1992 series of hikes.
Why?
Because Keating isn't running the show, Numpties are. The raising of interest rates worked to flush out all the crap after the decadent crayfish and champagne and cocaine 80s, and the Howard years rode the back of it.
How will a rise in interest rates affect retail? Tourism? Public service? Charities? Stocks? Currency? You and I both know the answer, and no RBA is going to kill a country's economy without good reason. Wages aren't moving, employment looks set to rise and the skew-whiff of underemployment being counted into full employment figures isn't helping.
There is evidence the Economy needs a kickstart, not curbing.
Saying the economy is running hot and needs cooling with rate rises is like saying house prices go up forever.
thats a very good summary of how things stand in my opinion.
We think pretty much alike.
